When financial times are tight, a person may have to make the decision on what gets paid and what doesn't. Large amounts of credit card debt can seem nearly impossible to pay off. Filing for personal bankruptcy may be a way for a New Jersey resident to start over again, because the alternative of not paying can bring on some serious repercussions. If there aren't some kind of payment arrangements made with a creditor in situations where debt can not be paid off in the allotted time frame, the process that a person could go through can be damaging to his or her credit and can potentially result in legal action.
The harassment from creditors can start as soon as a payment has been missed. If a person avoids paying the minimum payment for a bill, even this amount can become higher once the fees for missing a payment are tacked on. If a payment is at least one billing cycle late, a creditor may contact the credit bureau, which can be damaging to one's credit score. After 90 days, the individual may lose the ability to use his or her card and will have most likely racked up additional fees for being delinquent.
If non-payment continues, a creditor may implement a charge-off and write off the debt off as a loss. However, this is not the end for the individual who owed the debt because he or she may be required to pay taxes on the unpaid amount. Once the debt has been written off, the creditor may sell the debt to a collector to try to cut its losses. This also can become a large negative mark on a person's credit report and will most likely result in stressful calls from collectors.
Alternatively, some creditors may decide to force a person to pay the bill by taking legal action. This could potentially force a person to pay and could also produce another negative mark on his or her credit score. Personal bankruptcy may be a great alternative for New Jersey residents wishing to circumvent the additional stress of attempting to repay a debt when they may not have the necessary means to do so. This method can reduce stress as well as allow a person to begin anew with a clean slate.
Source: Credit.com, "What Happens If I Don't Pay My Credit Card Bill?", Christine Digangi, May 19, 2014